Ghana unexpectedly hikes rate for first time in six years
Ghana’s central bank raised its benchmark interest rate for the first time since 2015, citing “significant” inflation risks.
The monetary policy committee lifted the rate by 100 basis points to 14.5%, the Bank of Ghana said in a statement Monday. The median estimate of nine economists in a Bloomberg survey was for the gauge to remain unchanged. Only two of nine forecast a hike and neither of them expected as much as a percentage point.
The increase — the first since November 2015 — unwinds some of the 250 basis points of easing announced since last year to prop up the West African nation’s coronavirus-ravaged economy. It comes after inflation accelerated to a 15-month high of 11% in October and breached the top of central bank’s target band of 6% to 10% for a second straight month.
“These elevated inflationary risks require prompt policy action to re-anchor inflation expectations to safeguard the central bank’s price stability objective,” the MPC said in a statement. The committee had room to move after it said recent data showed increased momentum in the pace of the economy’s recovery from the impact of the coronavirus pandemic.